Directions: Read the business transactions provided below. Prepare the journal entry for each transaction
based on the method being asked and the adjusting entries associated with the initial recording.
1. On July 1, 2023, a commission agent received 36,000 php as a commission from a client. One-third of
the commission received is in respect of work to be done next year. (Liability method)
Initial Recording:
Cash 36,000
Unearned Commission 36,000
Adjusting Journal Entry:
Unearned Commission 24,000
Commission Income 24,000
2. On December 1, 2021, EFG Company collected from a tenant 60,000 as rental fee for three months
starting December 1. (Income method)
Initial Recording:
Adjusting Journal Entry:
3. On September 1, 2022, JYC Corp. paid in advance their 6-month period utility bills. (Expense method)
Initial Recording:
Adjusting Journal Entry: 4. The LEN Co. bought a one-year insurance policy on May 31, 2024. (Asset method)
Initial Recording:
Answer (1)
The commission agent received cash, but since a portion relates to future work, it's initially recorded as unearned commission (a liability).- Adjusting Journal Entry (Liability Method): - Debit: Unearned Commission - 24,000 PHP- Credit: Commission Income - 24,000 PHP
